Current for 2026•As of: July 2026

Rent or Buy Calculate the comparison.

Compare wealth growth when renting vs. buying a home.

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Property & Rent

€
100,000 €2,000,000 €
€
300 €5,000 €
Price-to-rent ratio: 27.8 years of rent (expensive)

Financing

€
0 €500,000 €
%
1.0 %8.0 %
%
1.0 %5.0 %

Assumptions

years
5 years40 years
%
0.0 %5.0 %
%
0.0 %5.0 %
%
0.0 %10.0 %
%
0.5% of the purchase price %3.0% of the purchase price %

Important assumptions

  • Renter invests the savings in the capital markets
  • Closing costs calculated by federal state
  • Maintenance: approx. 1-2% of the purchase price p.a.
  • A price-to-rent ratio below 20 is considered cheap
  • Taxes (capital gains tax, speculation tax on property sales) are not taken into account

Buying is more advantageous

After 20 years — difference: +79,369 €

Wealth growth over 20 years

Zeitreihen-Diagramm: Buy endet bei 567,674 €; Rent endet bei 488,305 €.0 €141,919 €283,837 €425,756 €567,674 €159131720Year
  • Buy
  • Rent

Wealth if buying

567,674 €

Wealth if renting

488,305 €

Difference

+79,369 €

Break-even year

Year 10

Monthly costs (initial)

Buying (installment + additional costs)2,233 €
Renting (cold rent)1,200 €
Difference1,033 €

Financing

Closing costs36,280 €
Financing required356,280 €
Total interest190,398 €

Opportunity costs

Your equity could alternatively earn 192,245 € in returns.

The calculation takes into account:

  • Closing costs (property transfer tax, notary, real estate agent)
  • Property value appreciation
  • Rent increase over the time period
  • Capital market return (alternative investment)
  • Maintenance and additional costs

Important note

These calculations are for non-binding information only and do not replace professional tax advice. All information without guarantee. Learn more

Sources & calculation basis

Our calculations are based on the following official sources (as of: July 2026):

Related guides

Renting vs. Buying

Rent vs. Buy: Making the Right Decision

The question rent or buy? is one of the most important financial decisions in life. Our calculator compares both options over your chosen time period and takes all relevant costs into account.

The comparison is complex: while buyers build up equity in the property, renters can invest the savings (lower monthly costs) and the capital not tied up in the capital markets.

What speaks for buying?

Building equity
With every repayment, you build up equity. Once the loan is paid off, the property is yours.
Inflation protection
Property values tend to rise with inflation over the long term, while your loan payment stays fixed.
Living rent-free in retirement
Once the loan is paid off, your biggest monthly expense disappears - important for retirement.
Freedom to renovate
In your own property you can renovate, remodel and design it however you like.

Example calculation: €400,000 property vs. €1,200 rent

Scenario after 20 years (Bavaria)

Scenario after 20 years (Bavaria)
ItemAmount
Purchase price€400,000
Closing costs (approx. 9%)€36,280
Equity€80,000
Financing required€356,280
Total interest (20 years)approx. €190,000
Property value (2% p.a.)approx. €594,000

The most important factors

  1. Price-to-rent ratio: Purchase price / annual rent. Below 20 = cheap, above 25 = expensive.
  2. Investment horizon: The longer you stay, the more buying pays off (closing costs are spread over more years).
  3. Interest rate level: Low interest rates make buying more attractive. Every extra percentage point means many thousand euros in additional costs.
  4. Capital market return: The higher the alternative return, the more attractive renting becomes.

What speaks for renting?

Renting offers flexibility and preserves capital. Especially in expensive cities with high price-to-rent ratios, renting can be financially more sensible.

Advantages of renting

Flexibility
Easier to relocate for a job change, growing family or lifestyle change.
No concentration risk
Your wealth is not concentrated in a single property.
Capital stays available
Equity can be invested in a diversified way (ETFs, stocks, etc.).
No maintenance
Repairs and renovations are the landlord’s responsibility.

Disadvantages of renting

Rising rents
Rents often rise with inflation. Over 20 years, rent can double.
No home in old age
In retirement, you still have to pay rent - on a lower income.
Uncertainty
Terminations for personal use or rent increases can cause stress.
No wealth building
Rent payments are gone - you don’t build any tangible assets.

Frequently asked questions about renting vs. buying

Everything important about the price-to-rent ratio, break-even and opportunity costs

The price-to-rent ratio indicates how many years of rent the purchase price corresponds to. Formula: purchase price / annual rent. A ratio below 20 is considered cheap, above 25 expensive. In Munich it is often 30+, in structurally weaker regions around 15.

Opportunity costs are the returns you forgo when you invest your equity in a property instead of the capital markets. With €100,000 equity and a 5% return, that would be approximately €165,000 in forgone profit after 20 years.

That depends on many factors: price-to-rent ratio, interest rate level, investment horizon and value appreciation. Rule of thumb: with a horizon under 10 years and a high price-to-rent ratio (>25), renting is often better. With 15+ years and a ratio below 20, buying pays off.

Many people forget: closing costs (7-15% of the purchase price), maintenance (1-2% p.a.), property tax, reserves for repairs, and possibly service charges for a condominium. These costs significantly reduce the return of a property.

Low interest rates make buying more attractive because the monthly payment decreases. At 3% interest, over 20 years you pay almost as much in interest as in principal. Every percentage point less interest saves approximately €3,000 per year on a €300,000 loan.

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